How frequently do you log on to your Facebook account in order to get a glimpse of the latest news, or go to LinkedIn.com to see whom will be your next business contact to add to your valuable network?

My honest answer to the question above would undoubtedly be “too often”, and by reflecting upon my friends’ behavioral patterns on social media platforms I am not alone with this addiction. Interestingly, social media has turned into a communication vehicle that enables constant interaction between people, twenty-four hours a day, seven days a week. Thus, as it has become more widely practiced among the public, companies have concurrently recognized golden growth opportunities with expansion on different web-based social platforms. With significant benefits such as inexpensiveness, international audience, and instant feedback from consumers, companies and their respective brands have found new Web 2.0 platforms to capitalize on (Papasolomou & Melanthiou, 2012). However, social media does not only provide potential profit gains. It also represents an uncontrollable environment where companies and brands are put in an increasingly vulnerable position since the information velocity patterns are difficult to predict. You simply cannot control what consumers will reveal about your brand, and what the impact will be on the reputation (Armelini & Villanueva, 2011). Subsequently, the purpose of this paper is twofold. Firstly, it examines how social media acts as a catalyst through a consumer perspective as shared information becomes crucial in the purchasing process. Secondly, it investigates the implications for companies with regards to reputation management as social media alters the communication landscape.

Social media: A change catalyst

Evidently, social media has revolutionized the internet by its ability to connect people and hence it has transformed the way human beings communicate on a daily basis. As a result, it has altered the traditional buyer-seller exchange dynamics where the power structures of conversation nowadays lie on the consumers’ side of the negotiation table (Kietzman et al., 2011). Social media is accordingly defined as social web-based forums such as Facebook, LinkedIn and MySpace (Akar & Topcu, 2011). A wider distinction of this contemporary phenomenon can further be made by including blogs, video sharing, wikis and podcasts (Papasolomou & Melanthiou, 2012). Today consumers are the main drivers of dialogue which enhances social media’s role as a catalyst for change of communication patterns from an offline to an online environment (Hanna, Rohm & Crittenden, 2011). No longer does a one way communication exist where the company directs information on products, services and brands and where consumers are passive recipients. Consumers are today actively using the platforms for various interactive purposes, for instance it is used to educate each other about their consumption experiences. This user generated content has intensified companies’ dependence on customers because in this online environment rumors spread fast (Hardey, 2011). Whether it is a comment left on Amazon or a YouTube review of a product, the user generated content provides valuable insights to consumer behavior. The online setting enables former and actual customers to conveniently share, edit, generate, critique and rank information and thoughts on specific companies, brands and services. Consumers are able to create and engage in communities where a piece of information, either positive or negative statements, can reach a vast number of networks in a short period of time. This is also referred to as electronic-word-of-mouth, and it has tremendous importance for companies to monitor as it influences other peoples’ purchasing intentions and decisions (Hardey, 2011; Bhagat, Klein & Sharma, 2009).

Social media: Catalyst for change in consumer behavior

Not only do social media act as a catalyst for the communication landscape as a whole. More specifically, it entails that consumers can access available information whenever and wherever they want, given access to Internet. This accordingly affects consumer behavior in terms of awareness, attitudes and information acquisition (Mangold & Faulds, 2009). Subsequently, consumers’ decision making process is influenced when intending to buy a product or service. What it all boils down to is how the consumer perceives the information gained in the initial step of information search before buying, and secondly how the consumer prefers to share the experience in the post-purchase communication and evaluation (Gensler, Verhoef & Böhm, 2012). As consumers go through their purchasing process, they move initially from mere discovery to validation, and within this process the tool of social media acts as a catalyst that confirms or disapproves the purchasing intentions. That is, social media provide frames of mind for the consumers.

The framing of human mind is a part of the cognitive structures that shape consumer attitudes and behavior (Christensen & Olson, 2002). These mental structures are psychological phenomena that one is more or less aware of and hence it is directly affecting consumer behavior. The effects of mental frameworks partly depend on how well the individual has improved self-awareness and self-reflection along the journey of life. We are all framed by previous experiences and knowledge, and all of us bring an invisible luggage wherever we go that reflects the way one behaves, talks and interacts with people around us. If we are lucky we are surrounded by people that encourage us to reveal our behavioral blind spots that we fail to identify ourselves. As a result, one is able to bring unconscious behavior to a conscious level to improve the ways of thinking and acting into critical terms. Yet, how to bridge this over to social media’s function as a catalyst? Simply put, as human beings today tend to spend a vast number of hours online, what appears in social media affects the way that we perceive the world around us. Thus, peer opinions revealed in online communities have shown to not only impact purchasing decisions, but also our perception of our surroundings (Akar & Topcu, 2011). Social media can even be a catalyst for social and political change. A striking example is an issue that was addressed in class, namely Kony 2012. With more than 43 million views on YouTube within two days after publication, the response from the public was massive and immediate. The emotional video about innocent children that are forced to become soldiers and sex-slaves in Uganda rapidly caught peoples’ attention and touched many hearts. Nevertheless, this video has also been criticized which has somewhat shadowed the viral success (Bal et al., 2013). However, it still demonstrates the substantial power of social media to mobilize resources in times of need and highlights its role as a catalyst to connect unrelated people for a common cause.

Social media: Catalyst for change in reputation management

A significant lesson to be learned from this is that social media’s function as a catalyst also is reflected in reputation management. As opposed to the previous section that dealt with consumer perspective, reputation management highlights the role of the company. Thus, the power of social media concerns companies as much as it concerns consumers (Hoffman & Fodor, 2010). On the one hand social media represents profit opportunities for businesses to connect with consumers and generate loyal brand ambassadors (Papasolomou & Melanthiou, 2012). However, on the other hand it puts companies in a vulnerable position with regards to potential reputational damage if the brand or product quality is rumoured to be inconsistent by the public online (Xia, 2013). The online information flow is completely out of a firm’s direct control as companies cannot filter the information from one consumer before it reaches another. This is why reputation management has become an up-to date issue that continuously needs to be dealt with by the companies. With increasingly active consumers in the online sphere comes pressure of companies to monitor and respond to the opinions and attitudes expressed. Everything a company does reflect on its reputation, and thus the purpose of reputation management is to bridge the gap between identity of the company and the external image of it (Roper & Fill, 2012, p.5). In the end it is indeed the perception of the stakeholders that counts, not how the company itself states the image to the public.

Furthermore, as reputation management signifies being up-to date with consumers’ perception of a brand, it means that negative online reviews needs to be addressed quickly to prevent reputational damage. Bad news travel fast online and therefore companies must put instant emphasis on the feedback gained from consumers and other stakeholders. To further illustrate reputation management and its implications, let me use the concept of Corporate Social Responsibility (CSR). At first sight CSR may seem to be a one-dimensional concept addressing the social, economical and environmental consciousness of firms as a prerequisite for success in the long run. However, research has shown that CSR can actually function as a reputation insurance by affecting the beliefs of stakeholder that adverse events are caused primarily by bad luck rather than bad management (Minor & Morgan, n.d.). Thus, CSR can (if not mismanaged) create a favourable halo that embraces the trust for the corporate brand. The halo effect accordingly entails that positive associations are equivalent to the company’s brand, products and services (Roper & Fill, 2012, p.141).Thereby, in times of crisis it enables the company to rely on its reputational reservoir by the trust that has been generated over time through CSR programmes (Minor & Morgan, n.d.; Greyser, 2009). Similarly, regardless of performing CSR work or not, a company benefits from creating trust and long-term relationships with its customers to protect itself in the challenging and uncontrollable online environment. By the same token, by accentuating positive user generated content the firm can contribute to engagement and loyalty, and hence resonate favourable associations (Papasolomou & Melanthiou, 2012). Indeed, since reputation is a judgement from the market, it needs to be managed wisely in order to be preferably preserved.

All in all, companies benefit from recognizing the catalyst role of social media. Evidently, consumers today tend to live actively online where interaction provides frames of mind for them. Information acquired online then affects consumer buying processes which become critical for companies to understand. The implications signify that companies need to be up-to date with consumer perceptions that are expressed and reinforced online. By adapting an early warning system firms may be able to scan the online environment for current attitudes and behaviours. However, this is easier said than done. It is time consuming as well as it requires the company’s representatives to be open-minded and unbiased when scanning the online periphery for perception trends. If open-mindedness and creativity are not closely attached to the prevailing norms in the organization, then this way of approaching the online sphere may be even more complex. Nevertheless, to manage reputation requires the firm to discover unfavourable associations at an early stage to prevent potential damage. Since this can actually make or break a company, it is even a question of survival in the long run. The key to successful reputation management appear to be long term relationships with customers since this will generate trust over time, given that brand (or product) promise is fulfilled, i.e. aligned with consumers’ expectations. With a solid trust foundation consumers tend to be more forgiving in times of crisis which is an important feature of today’s dynamic online environment.